You’ve probably heard that wealthy people like Donald Trump have filed for bankruptcy in the past, so you know it’s not a death sentence. Yet, your own credit score and financial standing don’t reflect that right now.
You’re likely wondering – how do you get a fresh start and open new bank accounts after filing for bankruptcy? Which type of bank accounts should you open? Learn everything you need to know about life after bankruptcy below.
Bankruptcy Impacts Your Bank Accounts
Did you owe money to your bank or credit union when you went to file for bankruptcy? One of the good aspects of filing for bankruptcy is that it immediately puts a stop to any collection activities conducted by lenders. That means any money getting siphoned out of your account should cease within a week or two.
While this protection is nice, it won’t last forever. A small amount of money will be exempt from getting taken, but everything else that’s still in your account will likely get taken and distributed to your lenders during your bankruptcy proceedings.
On top of that, you may not even be able to access your funds right away. Many banks choose to freeze your account when you initiate bankruptcy proceedings. If you owe money to that bank or institution, then they may just take the money in your account to satisfy your debts.
As if that wasn’t enough, an overdrawn account will get reported to the major credit agencies. This disclosure will inevitably lead to a drop in your credit score. When it’s all said and done, you can expect to shave about 130-200 points off your score after bankruptcy. It’s not ideal, but these negative dings will only stay on your credit report for about seven years.
Depending on your situation, you may be able to discharge some of your debts after a Chapter 13 bankruptcy. You may still need to repay some other debts over three to five years. With a Chapter 7 bankruptcy, much of your debt will get wiped out, but you may have to liquidate or sell off some of your assets to make it happen.
How to Choose the Best Bank Moving Forward
After going through bankruptcy, your former banking institution may not allow you to continue doing business with them. Even if they do encourage you to remain loyal to their bank, it may be time to start looking for a better bank for your future financial dealings. Here are a few factors to look for when choosing a new bank after bankruptcy:
· Pick a bank without monthly fees
· Carefully read the account’s overdraft options and fees
· Choose a bank that’s convenient for you to use
· Know the account’s withdrawal options and ATM fees
· Learn whether you can manage your account online
· Verify the debit card is accepted at major retailers
· Analyze all the card or account’s hidden fees
· Choose trusted lenders over new banks
It’s important to start trying to rebuild your credit and financial standing as soon as possible after your previous debt gets discharged. At first, lenders will be hesitant to do business with you, but things will improve over time. The best thing you can do is start by making a goal to pay all of your bills on time going forward.
How a Bankruptcy Attorney Can Help You Start Over
Are you struggling to navigate through the choppy waters of bankruptcy? You’re not alone. Experts estimate that over 20 million Americans would benefit from starting bankruptcy proceedings.
Our Kansas City bankruptcy attorneys can help you through every step of the process. Along the way, we’ll assist you with:
· Halting all automatic payments before filing for bankruptcy
· Ensuring institutions comply with orders to stop collection activities
· Negotiating with lenders
· Stopping any repossession attempts
· Filing the appropriate paperwork with your local court
· Protecting your rights throughout bankruptcy proceedings
Are You Considering Filing For Bankruptcy?
If you feel bankruptcy is the best option for your financial situation you need to speak with an experienced bankruptcy lawyer as soon as possible. Please contact us online or call our office directly at 888.348.2616 to schedule your free consultation.